Media Statement on Small Victory in Craft Spirit Legislation

Statement by Margie A.S. Lehrman, Executive Director, American Craft Spirits Association, and Thomas Mooney, President, American Craft Spirits Association, in response to the TAX “EXTENDERS” Bill Passed by the United States Congress:

December 18, 2015

The craft spirits industry is growing each day. Currently, we estimate there are more than 800 craft distilleries in the United States, up from just a few dozen a decade ago. The craft spirits industry is part of a renaissance movement, bringing agriculture and tourism revenue and adding jobs to local and state economies.

Over the past year, the American Craft Spirits Association (ACSA) has worked tirelessly to aid the craft distiller by reducing the unfairly high Federal Excise Tax (FET) that continues to limit the economic success of our nation’s distillers. Taxes on distilled spirits are among the nation’s highest, comprising 54% of the typical spirits product’s purchase price. Craft spirits producers remain disadvantaged compared to our nation’s craft brewers and small wineries who receive a significant reduction in their FET rate. In fact, a craft spirits producer pays 5.4 times more FET than a craft brewer, and 16.4 times more FET than a small winery, for equal quantities of beverage alcohol.

This year, we came closer than ever to reducing this unfair tax burden through a historic alliance with other sectors in our industry. ACSA, together with the Distilled Spirits Council of the United States (DISCUS) and the major trade associations for the wine, beer, and cider sectors, joined forces to rally support for the Craft Beverage Modernization and Tax Reform Act (CBMTR) in Washington. Originally introduced by Senator Ron Wyden (D-OR), the Ranking Member of the Senate Finance Committee, CBMTR is a thoughtful legislative proposal that would result in growth, investment, and new jobs within each sector of the beverage alcohol industry.

An amended version of CBMTR gained widespread support from Senators and Members of the House, and an opportunity surfaced to include it in the tax “extenders” bill that the House passed yesterday and the Senate passed this morning. In the end, however, House and Senate negotiators opted not to include FET reduction in the final bill. This was a disappointment for our entire industry, and a missed opportunity to stimulate private investment and create thousands of quality jobs across the country.

Nonetheless, a key provision from the original CBMTR bill did advance, and it will benefit many of America’s craft distillers by allowing small producers who pay less than $50,000 in FET annually to file quarterly rather than twice a month, and by waiving the current bond requirement. This is an important victory for the craft distilling community, and it is only the first of many successes as we continue our fight. The inclusion of this provision was a direct result of the growing strength of the craft spirits sector, as well as ACSA’s ability to make our voice heard in Washington.

“While we are disappointed that FET parity was not included in the bill that was just passed, we came closer than ever before to passing legislation in Congress that will benefit all craft distillers,” said Margie A.S. Lehrman, Executive Director, ACSA. “By keeping more money ‘at home,’ distillers would have the ability to invest and grow, employing more workers and generating greater agriculture and tourism revenue in their local economies. We plan to continue our work with our partners in the industry to fix this unfair issue for our members, and for the broader craft distilling industry.”

Thomas Mooney, President of ACSA and CEO of House Spirits Distillery in Portland, Ore. added, “The reduction in FET filing frequency and the bond waiver, both benefiting the smallest members of the craft spirits sector, are major victories for our industry. They are also a first step toward comprehensive change that must include FET parity in order to unleash the full entrepreneurial potential of the craft spirits community. ACSA will not allow this momentum fade away, and we will push even harder in 2016.”